LEGAL ASPECTS OF 

ENTREPENURSHIP

Facilitator: Shahzeb Shaikh

Email: shahzeb.shaikh@gmail.com
Cell: 03002151004
 DISCUSSION TOPICS
 Definition of law

 Sources of Law

 Types of business modes

 Important Legislations /Agencies related to business

 SOURCES OF LAW

 Sources of law are the material and processes out

of which law is developed.

 Three basic sources of law

 Constitution

 Statutes

 Case Laws
 LAW
“The system of rules which a
particular country or community
recognizes as regulating the
actions of its members and
which it may enforce by the
imposition of penalties” –
Oxford Dictionary

“Law is a set of rules and

regulations enforced by the state
through its institutions which is
binding upon human society.”
 CONSTITUTION

 Constitution is a system for state governance and

codified as a written documents that provides the
framework for running the affairs of state through rules,
regulations, and principles.

 It is the Supreme Law of the Land.

There are two type of constitutions:

 Written constitution (Pakistan, USA, India etc)

 Un-written constitution (UK, Saudi Arabia, Israel etc).

 STATUTES

 Statute is a set of written enactment of a legislative

authority that governs specific affairs of state.

 Statutes are the result of parliamentary legislation

as Acts. For e.g. Contract Act, 1872

 Statutes basic function is to command or prohibit

acts.

 Statutes are primary source of law.

 CASE LAWS

 Case law is judge-made law.

 Judge interprets law, statutes, and regulations.
 If a lower court judge acts against any precedent
and that judgment is not challenged in higher
court that judgment will stand active.
 A court may rule against a precedent that is
outdated and ground realities are changed.
 A court may over rule its own previous judgment.
 CASE LAWS

 A court may review its on decision and may pass

order vice versa of previous decision.
 Court may take suo moto notice of any
government discriminatory decision or action that
is contrary to law
 PARTNERSHIP V. SOLE
PROPRIETORSHIP
BASIS OF DISTINCTION PARTNERSHIP SOLE PROPRIETORSHIP

Formation Agreement required No Agreement required

Governing Acts Partnership Act, 1932 No Act

No. of Members 2 to 20 Only one

Capital Arranged by partners Proprietor arranges it

Decision-making Time –consuming Speedy

Sharing of profit & loss According to sharing No shares

Ownership & Management By partners By sole proprietor

 PARTNERSHIP V. COMPANY
BASIS OF DISTINCTION PARTNERSHIP COMPANY

LEGAL ENTITY No separate legal entity Separate legal entity

LIABILITY Unlimited liability of partners Liability of its members is

limited to the extent of the
value of shares held by them
TENURE No long lease of life. May Perpetual existence unless
dissolve due to various wound up as per law
reasons
NO. OF MEMBERS 2 – 20 partners Minimum 7 members for
public ltd with no limit of
maximum number
TRANSFER OF INTEREST No transfer without consent of Transfer of shares as per
all partners desire of the member
AGENCY Mutual agency No mutual agency
 PARTNERSHIP V. COMPANY
BASIS OF DISTINCTION PARTNERSHIP COMPANY

Distribution of Profits As per partnership deed Profits in the form of

dividends

Management Lies with all the partners Members don’t participate

in the management.
Property Property of the firm is the Members and company are
joint property of the all separate entities.
partners.
 INSTITUTIONS RELATED TO
INVESTMENT PROMOTION
 Board of Investment (BOI)

 To facilitate foreign and local investors the Government of

Pakistan has established a Board of Investment (“BOI”) to act as
a “one-stop shop” and thereby facilitate contracts between
potential investors and all government agencies.

 Sindh Board of Investment (SOBI) is a full-fledged Department

as the Provincial version of BOI.
 INSTITUTIONS RELATED TO
INVESTMENT PROMOTION
 Small and Medium Enterprises Development Authority
(SMEDA):

 SMEDA is an autonomous institution of the Government of

Pakistan under Ministry of Industries and Production.
SMEDA was established in October 1998 for encouraging
and facilitating the development and growth of small and
medium enterprises in the country
 INSTITUTIONS RELATED TO
INVESTMENT PROMOTION
 Export Processing Zone (EPZ)

 The country also has Export Processing Zones (EPZ) where the
investors enjoy:
 100 percent ownership rights;

 100 percent repatriation of capital and profits;

 No minimum or maximum limit for investment;

 Duty-free imports of machinery, equipment and material;

 No sales tax on input goods, including electricity and gas bills;

 TAXATION
 Federal Board of Revenue is the major Tax imposing and Revenue
Generating body of the Government.
 It is governed by the Income Tax Ordinance, 2000 with certain
amendments from time to time.
 The Federal Government prescribes the rates of taxes in the Annual
Budget in June every year.
 Customs Duties and Sales Tax

 Customs duties and sales tax are payable on imports of all goods
(varying according to nature of goods). The importer also has to pay
income tax at a certain rate on the total value of imported goods
towards his full and final liability of income tax.
 LEGISLATIONS RELATED TO BUSINESS
LAW
 Law of Contract
 The Contract Act, 1872 enacted by the British Parliament is based upon the
general principles of English Common law. Besides chapters on formation of
contracts, voidable contracts and void agreements, performance of
contracts, consequence of breach of contract, it includes provisions relating
to indemnity and guarantee, bailment and pledges and agency.

 Transfer of Property
 The Transfer of Property Act, 1882 deals with transactions relating to
transfer of immovable property including sales, leases, mortgages, charges
and transfers of actionable claims. All transfers of immovable property are
subject to stamp duty and must be registered with the Registrar of
Conveyances under the Registration Act.
 LEGISLATIONS RELATED TO BUSINESS
LAW
 Sale of Goods

 The Sale of Goods Act, 1930 (“SOGA”) contains provisions relating to

the formalities of the contract of sale, the price, conditions and
warranties, implied terms and conditions and transfer of title. It also
provides the rights of unpaid seller against the goods, namely; unpaid
seller’s lien, stoppage in transit and suits for breach of sale contracts.
 SOGA, except for one amendment, is in its original form and has not
been updated by a modern statute like that of UK Supply of Goods
and Services Act 1982. The supply of services is governed by the law
of contract. The only amendment in SOGA is the addition of the
obligation of the seller to point out the defects in the goods to the
buyer.
 COMPETITION LAW
 Competition Law
 The Competition Act 2010 has been enacted to provide free competition in
all economic and commercial activities, to improve economic efficiency and
to protect consumers from anti-competitive behavior. The law seeks to
prohibit abuse of market dominance, certain types of anticompetitive
agreements, deceptive market practice, and mergers of undertakings that
substantially reduce competition.
 Competition Commission of Pakistan (CCP)
 The Competition Commission of Pakistan has been established as a quasi-
judicial, quasi-regulatory law enforcement agency with a specialised
umbrella jurisdiction over the economy as a whole. Its duty includes
ensuring free competition in all spheres of commercial and economic
activities and to prevent or eliminate anti-competitive behavior.
 INTELLECUTAL PROPERTY LAW
 Intellectual Property

 Pakistan is a signatory to the Agreement on Trade Related Intellectual Property

Rights, 1994.

 Trademarks

 The Trade Marks Ordinance, 2001, has widened the scope of the law by including
services marks, domain names, unfair competition, and misleading advertisements.
Any person claiming to be the proprietor of a trademark used or proposed to be used
by him may apply for the registration of the mark in the Register of Trade Marks. The
period of registration is 10 years from the date of the application and may be
renewed at the expiration of the 10 year period for another 10 years on payment of
the requisite fee. In the case of infringement, the proprietor of the trademark is
entitled to relief by way of injunction, damages, accounts and any other relief the
court may deem fit. Applicants from a country signatory to the Paris Convention that
apply for registration of the same mark within six months of such application are
accorded priority in the registration of the mark.
 INTELLECUTAL PROPERTY LAW
 Copyright
 Pakistan is a member of the Berne Copyright Convention (1886) and the
Universal Copyright Convention (1952); accordingly, all members of these
Convention countries enjoy the same rights as Pakistan nationals.
 The Copyright Ordinance, 1962 offers protection to literary, dramatic,
musical and artistic works which include works of photography,
cinematographies and all recordings. The protection of ownership of the
copyright including computer programs and compilation of data under the
Ordinance is limited to the author or publisher who is granted protection
against possible infringement, provided the work has been registered with
the Registrar of Copyright. The “owner of copyright” can avail both civil
remedies and criminal prosecution. The works of international
organisations and foreign works are specifically protected under Sections 53
and 54 of the Ordinance.
 INTELLECUTAL PROPERTY LAW
 Patent and Design

 Under the Patents Ordinance, 2000 the term of the patent is 20

years from the date of filing and priority can be claimed within
12 months from the date of application filed in any one of the
World Trade Organization member countries.
 LABOUR LEGISLATIONS
 Industrial Relations Act, 2012

 The Federal Government on 14 March 2012 enacted the Industrial Relations Act, 2012.
The Act applies to all persons employed in any establishment or industry in the Islamabad
Capital Territory or establishments carrying on business in more than one province. The
National Industrial Relations Commission has also been established under the Act to:

 Register industry-wise trade unions in the Islamabad Capital Territory and federation of
such trade unions and trans-provincial trade unions and federations at the national level;

 Determine a collective bargaining agent amongst industry-wide trade unions, and

federation of such trade unions at the national level;

 Adjudicate and determine the industrial disputes which in the opinion of the Government
are of national importance and are referred to it by the Government. The law also defines
unfair labor practices on the part of workmen and employers that entail punitive action.

 All four Provinces have also enacted similar Industrial Relations Acts to regulate trade
union activities and resolution of disputes between employers and employees.
 BANKING LAW
 Banking Law

 The State Bank of Pakistan (“SBP”), the Central Bank, regulates

the credit system, issues bank notes and keeps reserves to
secure monetary stability. SBP issues circulars and Prudential
Regulations for banks to regulate their credit and risk
exposures. It also prescribes guidelines for loan facilities, and
sets criteria for management.
 ARBITRATION LAW

 Arbitration Act 1940

The Arbitration Act, 1940 is based upon the provisions of the
English Arbitration Act of 1934, with some changes.
 THANK YOU!

ANY QUESTIONS ?
You can find me at shahzeb.shaikh@gmail.com